Progen raises $9.6m in share placement

Small molecule drug company Progen Industries (ASX:PGL, Nasdaq:PGLAF) has doubled its cash reserves in a share placement aimed to help the Brisbane biotech expand its product pipeline.

Progen has raised AUD$9.6 million through the institutional placement of 6 million new, fully paid shares at $1.60 each, which represents a discount of about 15 per cent to the market value.

The move lifts the company's cash reserves to $20 million, which it plans to use as part of a long-term strategic growth strategy that involves the establishment of a pipeline of drug candidates.

Progen's lead compound, anti-cancer drug PI-88, has recently completed phase 2 trials and the company is in the process of securing an out-licensing arrangement that will take the drug through to later stage trials.

Progen chairman Stephen Chang said the company was at a juncture where strategic growth initiatives should be pursued to secure long-term viability.

"Never before has Progen been at such an opportune moment, with PI-88 showing promise in the clinic, the anti-angiogenesis field setting the stage for future cancer drug development and the global biotech capital markets once again accommodating," Chang said.

"Progen plans to take advantage of these favourable conditions and proactively build on its pipeline of future products.

"This will ensure that once PI-88 is partnered, there is a strong suite of future drug candidates, complemented both by in-house drug discovery and in-licensing that will allow the company to succeed."

Progen's second lead candidate, liver cancer drug PI-166, was in-licensed from the University of NSW a year ago and began the trial process in January.

The company's business development manager Sarah Meibusch would not disclose whether any new licensing deals were in the offing.

"We recognise that we need to continue to grow and build the company and these funds are intended to begin the growth strategy to bring new candidates through in-licensing or through our own drug discovery program," Meibusch said.

"We have already begun that process with PI-166."

She said Progen's drug pipeline would continue to focus on anti-cancer compounds. The share placement was handled by Taylor Collison and EG Capital, with share issue still subject to shareholder approval at Progen's AGM, scheduled for later this year.

"It has been a very successful year for Progen, with new data emerging from PI-88 trials showing disease stabilisation in a growing number of patients across several cancer indications," Chang said.

"The next year will be another challenging and exciting one as we seek to expand our current oncology drug development portfolio, move forward in our clinical trial program and accelerate our PI-88 partnering initiatives."

Progen's drug discovery efforts are focused on the development of potent, selective inhibitors of carbohydrate-protein interactions and their implications within a range of diseases.

At the time of writing, Progen shares were trading 1.6 per cent higher at $1.92.